US chauvinism and India's oil conundrum

The White House issued a statement on Monday saying that the US will not extend the exemption period for countries buying oil from Iran and the early May deadline remains unchanged.

According to the US media, this means that the US will impose sanctions on countries that continue to purchase oil from Iran after May 2. What should India do now?

After the last sanctions, the US gave exemptions to eight countries in the region to continue to import oil from Iran for the next six months. India was one among them (China, Japan, Turkey, South Korea and Japan are importing along with us).

Do we risk sanctions now after May 2? While questions could continue to raise on whether the US is following a hegemonistic policy and unilaterally making its decision unmindful of the impact it would create on other countries in its blind and irrational rage against Iran, it is more important to ponder over our options.

India, however, will go ahead and plead with the US for an extension of the exemption period as bringing down the import from Iran (of oil) to zero does not make any sense.

The problem for China is multi-fold, of course as it is the largest importer of Iranian oil. While India may have been insulated on the Chabahar front, its current plan on using a rupee payment account for Iran's oil may be in danger.

India has been paying for a large percentage of its oil imports through a rupee mechanism that is deposited in an escrow account in an Indian bank. Iran uses that money to buy essential items like food stuff, medicines etc from India.

After May 2, US has told India it would not allow India to add to the corpus, although Iran would be able to continue to use whatever is left in the account.

Indian officials say there is little "clarity" on the matter. Reacting to US Secretary of State Mike Pompeo's announcement on Monday stating that there would be no more 'waivers', the MEA spokesperson said in an anodyne statement, "We are adequately prepared to deal with the impact of this decision.

The government will continue to work with partner nations, including with the US, to find all possible ways to protect India's energy and economic security interests."

The Chinese foreign Ministry took a sharper stand, saying China 'consistently opposes US unilateral sanctions.' India cannot antagonise the US much as it is working closely with the latter on several fronts including against Pakistan vis a vis Masood Azhar etc.

The UAE and Saudi Arabia have assured the Indian government that they would ensure adequate supply of oil to meet India's needs. The US too intends to step up its oil exports, though its pipeline infrastructure needs to be augmented.

Under the waiver, India was reportedly allowed to import 300,000 bpd. India will suffer quite a bit, because its refiners, say officials, are configured for the particular variety of Iranian crude.

It is going to be a tough call for us as to how to handle the situation.